Pittsburgh Public School directors on Tuesday said they are gearing up for a “challenging budget year” as they face a potential $29.6 million deficit in the 2024 operating budget.
Discussions around funding for next school year came during a budget workshop where directors reviewed the proposed $713.9 million budget that holds the line on taxes, while largely focusing on the deficit that would be covered by the district’s depleting fund balance.
“Sometimes we make decisions because we want to and sometimes we make decisions because we have to,” school director Gene Walker said. “And we’re getting into the have to make decisions portion of our time so 2024 is going to be quite an interesting year and I hope that [Superintendent Wayne] Walters and [chief financial officer Ronald] Joseph are ready for those conversations because I expect them to start right away. We can’t obviously continue to start each year with $27 million, $28 million, $30 million deficits.”
The workshop came a week after the district released the 2024 preliminary budget, which included $684.2 million in revenues and $713.9 million in expenditures. Under that plan, district officials would use the fund balance to cover the expected deficit, dropping that budget line to an estimated $45.4 million, and causing the fund balance to no longer adhere to the board’s minimum 5% fund balance policy.
That means the board could not rely on that money to balance its 2026 budget if there is a deficit. It would also continue a year-over-year decrease since 2021, when the fund balance totaled $86.6 million.
“Using your fund balance to fund your operations is not where we want to be,” Mr. Joseph said. “We have a lot of factors that are affecting our bottom line. We weren’t in a good position in previous years and we’re not in a good position this year.”
District officials over the past year have begun discussions over how to reduce expenditures moving forward. One option being considered is consolidating school buildings to account for declining enrollments. As things currently stand the district’s school buildings have room for 40,000 students. But today the district enrolls around 19,000 students.
Potential plans for consolidation could be presented at the start of the year.
But at the same time, Pittsburgh Public has costs they cannot control such as charter and cyber school tuition payments. According to 2024 projections, the district would pay more than $144.7 million to charter school tuition, or nearly 20% of total expenditures. In Pennsylvania, public schools are required to cover tuition costs for charter and cyber schools.
The district also defers a portion of their earned income tax to the city of Pittsburgh. In 2024, the .25% levy to the city will total $23.8 million, meaning PPS will bring in $166.9 million in tax dollars.
Looking at those numbers, Mr. Walker said the district “should be jumping” behind any charter school tuition reform that happens on the state level “because we can’t keep functioning in that manner.” He added that there “are some preliminary conversations with the city happening” regarding the earned income tax and that city officials are “saying all the right things.”
Mr. Joseph added that moving forward the board should prioritize a more collaborative budget process to ensure these conversations happen earlier. He added that district officials need to continue critiquing the PPS footprint and how services are delivered.
But despite those challenges, Mr. Walker remained hopeful about the future of the district, noting that budgetary deficits in past years have for the most part been less than anticipated.
“I think there is a solution,” Mr. Walker said. “They’re not easy and some of them are not fast but I think we can get it done. It’s just going to take a lot of hard work, a lot of hard conversations and some really difficult decisions over the next year or two to get it done.”
The school board has to pass a budget before the end of this year.
First Published: November 29, 2023, 2:26 a.m.
Updated: November 29, 2023, 11:37 a.m.